Canadian company hopes to get hearing on Portland terminal despite mayor's opposition

In a Feb. 26 letter to Pembina Pipeline Corp., Mayor Charlie Hales expressly committed to bring the company’s proposed $500 million propane terminal before the City Council for a vote.

A little more than a month later, before an April 7 Planning and Sustainability Commission hearing, Hales pressed commission chairman Andre Baugh to move the propane project forward so the City Council could vote on it.

Then, in a surprising about-face, Hales said May 6 that he opposed the propane terminal he’d been championing, and urged the company to withdraw the project, planned for Port of Portland property in North Portland. Hales subsequently removed the propane terminal hearing from the City Council’s June 10 agenda.

Opposition clearly was growing among Portlanders alarmed by safety issues and about the city becoming a channel to export fossil fuels to Asia.

Hales also might have given up hopes of passing the $6.2 million-a-year fee to offset carbon emissions that the Planning and Sustainability Commission proposed as a condition of approval. Money from the fee could be used to install more solar energy and other projects to lower carbon emissions. That might help deflect criticism that the city recently named a “climate action champion” by the Obama Administration was about to approve a major fossil fuel export terminal.

Hales’ turnaround came as Pembina and Port leaders were raising objections to the carbon fee. On the afternoon of May 7 — the day Hales publicly announced his new position — the first negotiating session on the carbon fee and other matters was slated to take place between the city, Port and Pembina, said Eric Dyck, Pembina’s project manager for the Portland terminal development. That session was canceled.

Pembina officials never said the $6.2 million carbon fee was a deal-killer, but they are now openly criticizing the idea.

“That’s 20 percent of our operating costs; it’s not insignificant,” Dyck said in an interview Monday. “It’s quite arbitrary how it’s done.”

Planning and sustainability commissioners devised a simple formula that assessed the fee on 20 percent of the propane to be exported, calculating that was the share that would drive up carbon emissions. But some uses of propane, such as replacing wood or coal, figure to reduce carbon emissions, so Pembina is concerned by the back-of-the-envelope math involved.

That was an “ad hoc idea, on-the-fly policy setting,” said Stu Taylor, a Pembina senior vice president.

In Hales’ Feb. 26 letter to Pembina, released Monday by the company, the mayor noted that “from the beginning, safety has been my key concern.”

Pembina officials argue they addressed on-site safety issues with an exhaustive independent review. Indeed, critics of the project were praising Pembina’s safety record and safety precautions by the end, and shifted their concern largely to rail transport of propane, which is beyond Pembina’s control.

But in his public statement announcing his opposition, Hales focused on environmental issues. “I do not believe Pembina has made the case as far as Portland’s environmental standards are concerned,” Hales stated.

Pembina officials can only guess what he was referring to, as the mayor wasn’t specific. “It would be nice to have a discussion about how he arrived at that, but we didn’t have the opportunity,” Dyck said.

Dyck and Taylor said the mayor’s decision could be a worrisome precedent for other businesses, because it wasn’t based on an objective standard set by the city. “What do they do to the next business?” Dyck said. “Mayor Hales has taken the goalposts and removed them from the field.”

Pembina officials have invested more than $15 million in the project, partly on the strength of early support from the mayor. They’re clearly not willing to give up just yet.

They have prepared more responses to concerns about the environmental footprint of the terminal, arguing that the massive amount of electricity used at the terminal will be offset by the purchase of green-power credits from Portland General Electric. They've also done a thorough reading of the proposed 2015 update of the city/county Climate Action Plan. The propane terminal would not have a significant impact on the city meeting its carbon reduction goals, based on the methodology in the plan, Pembina says, because products shipped through Portland are not assessed.

For now, Pembina officials and their supporters in the business and labor sectors are lobbying the other four city councilors, hoping one of them might step up and place the Pembina hearing on the City Council agenda.

“The mayor himself asked us to be patient with the process,” Dyck said. “We’re patient.”

But Hales directly oversees the Planning and Sustainability Bureau, and usually councilors get wide berth to manage their bureaus. It would be a somewhat audacious move for other councilors to second-guess him on this issue — especially when the mayor is up for re-election next year.


Excerpts from Hales’ Feb. 26 letter to Pembina:

If Pembina supplies safety and risk assessments by March 16, “we commit to following public review process within the following timeline.” Then the letter cites Planning and Sustainability Commission hearings on March 17 and April 7, with an expected vote on April 7.

“If the PSC votes to take action, the Bureau of Planning and Sustainability will timely file the necessary ordinance and supporting documents to move the recommendation to City Council for its deliberation and action.”

“I understand your company’s concerns about the length of our decision-making process. However, it is important that the city deliberates major public decisions in a thoughtful and open manner.”

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